##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-Q/A
 Amendment No. 1
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended
    December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission File Number 0-30539
 TVIA, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-3175152(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)4001 Burton Drive,
    Santa Clara, California 95054(Address of Principal
    Executive Offices) (Zip Code)   Registrants telephone number, including area code:
    (408) 982-8588
      þ o
  Rule 12b-2
  Large
    accelerated filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ  Rule 12b-2 o þ




---



TABLE OF CONTENTS  PART I: FINANCIAL INFORMATIONITEM 1: FINANCIAL STATEMENTSTVIA, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTVIA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWSTVIA, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSRISK FACTORSITEM 4: CONTROLS AND PROCEDURESSIGNATURESEXHIBIT INDEXEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2    Table of Contents   EXPLANATORY
    NOTE
  Form 10-Q/A Form 10-Q
  Form 8-K
  Form 10-Q/A. Form 10-Q/A
  Part I
  
    Item 1, Financial Statements
    Item 2, Managements Discussion and Analysis of
    Financial Condition and Results of Operations
    Item 4, Controls and Procedures  Part II
  
    Item 1A. Risk Factors   2




---



##### Table of Contents



PART I:
    FINANCIAL
    INFORMATION 
  ITEM 1:
    FINANCIAL
    STATEMENTS  TVIA,
    INC. AND SUBSIDIARY
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except per share data)
    (unaudited)
  December 31,


March 31,2005


2005RestatedASSETSCurrent assets:Cash and cash equivalents

$
6,070


$
4,078Short-term investments


8,865



17,664Accounts receivable, net


3,044



792Inventories


1,712



598Deferred cost of goods sold


400



Other current assets and prepaid
    expenses


958



881Total current assets


21,049



24,013Property and equipment, net


985



1,088Other assets


375



386Total assets

$
22,409


$
25,487LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
664


$
302Accrued liabilities and other


2,327



1,738Short-term portion of notes payable


630



460Deferred revenue


775



Total current liabilities


4,396



2,500Long-term portion of notes payable


204



345Total liabilities


4,600



2,845Commitments and contingencies
    (Note 7)Stockholders equityCommon stock, $0.001 par
    value: 125,000 shares authorized; 23,466 and
    23,171 shares outstanding, respectively


24



23Additional
    paid-in-capital


94,667



93,118Accumulated comprehensive income
    (loss)


18



(89
)Accumulated deficit


(76,150
)


(69,660
)Treasury stock


(750
)


(750
)Total stockholders equity


17,809



22,642Total liabilities and
    stockholders equity

$
22,409


$
25,487    3




---



##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (unaudited)
  Three Months Ended


Nine Months EndedDecember 31,


December 31,2005


2004


2005


2004Restated





RestatedRevenues

$
1,935


$
1,090


$
4,798


$
2,235Cost of revenues


906



589



2,475



1,232Gross profit


1,029



501



2,323



1,003Operating expenses:Research and development


1,341



1,206



3,876



3,716Sales and marketing


788



434



2,051



885General and administrative


1,044



545



3,213



1,408Total operating expenses


3,173



2,185



9,140



6,009Operating loss


(2,144
)


(1,684
)


(6,817
)


(5,006
)Other income, net


117



104



327



303Net loss

$
(2,027
)

$
(1,580
)

$
(6,490
)

$
(4,703
)Basic and diluted net loss per
    share:

$
(0.09
)

$
(0.07
)

$
(0.28
)

$
(0.21
)Shares used in computing basic and
    diluted net loss


23,579



22,857



23,390



22,754  4




---



##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (unaudited)
  Nine Months EndedDecember 31,2005


2004RestatedCash Flows from Operating
    Activities:Net loss

$
(6,490
)

$
(4,703
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


916



901Loss on disposal of fixed assets






104Write-down of license technology






81Stock based compensation


1,039



Stock issued in settlement of
    lawsuit


120



Changes in operating assets and
    liabilities:Accounts receivable


(2,252
)


(335
)Inventories


(1,114
)


98Deferred cost of goods sold


(400
)


Prepaid expenses and other current
    assets


(46
)


(164
)Accounts payable


362



18Accrued liabilities and other


589



2Deferred revenue


775



Net cash used in operating
    activities


(6,501
)


(3,998
)Cash Flows from Investing
    Activities:Purchase of
    available-for-sale
    investments


(11,990
)


6,554Proceeds from sale of
    available-for-sale
    investments


20,896



(4,311
)Proceeds from sale of software unit






753Purchase of property and equipment


(459
)


(409
)Net cash provided by investing
    activities


8,447



2,587Cash Flows from Financing
    Activities:Repayments of note payable


(345
)


Repayments of capital lease
    obligations






(378
)Proceeds from issuance of common
    stock


391



226Net cash provided by (used in)
    financing activities


46



(152
)Net increase (decrease) in cash
    and cash equivalents


1,992



(1,563
)Cash and cash equivalents at
    beginning of period


4,078



3,259Cash and cash equivalents at end
    of period

$
6,070


$
1,696Supplemental Cash Flow Information:Interest paid

$
20


$
Note payable issued for the right
    to the use of design software

$
374


$
920  5




---



##### Table of Contents



TVIA,
    INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)
  NOTE 1 
    INTERIM STATEMENTS
    Form 10-K
  NOTE 2 
    SUMMARY OF SIGNIFICANT POLICIES
  Use
    of Estimates
      Consolidation
    Cash
    and Cash Equivalents and Short-Term Investments
  available-for-sale
  Allowance
    for Doubtful Accounts
   6




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Inventories
  first-in, first-out
  Property
    and Equipment
  straight-line
  Impairment
    of Long-Lived Assets
    Revenue
    Recognition
  Revenues.
       7




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
       Software
    Development Costs
    Research
    and Development Expenses
    Income
    Taxes
  Accounting for Income
    Taxes.
  Comprehensive
    Income (Loss)
    Three Months Ended


Nine Months EndedDecember 31,


December 31,2005


2004


2005


2004Restated





RestatedNet loss

$
(2,027
)

$
(1,580
)

$
(6,490
)

$
(4,703
)Change in unrealized gain (loss)
    on
    available-for-sale-investments


11



(40
)


107



(113
)Comprehensive loss

$
(2,016
)

$
(1,620
)

$
(6,383
)

$
(4,816
)   Recent
    Accounting Pronouncements
   8




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Employee
    Stock benefit Plans
  Stock
    Option Plans
  2000
    Stock Incentive Plan and 2000 Employee Stock Purchase
    Plan
        SARS
    Plan (Stock Appreciation Rights)
   9




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Out
    of Plan Options
    out-of-plan
  WeightedOptions





AverageAvailable


Options


Exercisefor Grant


Outstanding


PriceBalance at March 31, 2004


2,245



4,894



1.74Additional shares reserved


730







Granted


(1,707
)


1,714



1.44Exercised






(496
)


0.51Cancellations


729



(729
)


2.17Balance at March 31, 2005


1,997



5,383



1.71Granted


(1,765
)


1,765



1.39Exercised






(121
)


0.89Cancellations


193



(193
)


2.82Balance at June 30, 2005


425



6,834



1.61Additional shares reserved


730







Granted


(170
)


170



2.02Exercised






(174
)


0.97Cancellations


89



(89
)


2.75Balance at September 30, 2005


1,074



6,741



1.62Granted


(370
)


370



1.72Exercised






(152
)


1.36Cancellations


4



(4
)


2.63Balance at December 31, 2005


708



6,955



1.63    10




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Options OutstandingWeighted








Options ExerciseableAverage


Weighted








WeightedRemaining


Average


Aggregate





Average


AggregateNumber


Contractual


Exercise


Intrinsic


Number


Exercise


IntrinsicRange of Prices

Outstanding


Life


Price


Value


Exerciseable


Price


Value(thousands)











(thousands)$ 0.12  $ 0.76


715



6.75


$
0.54


$
1,187



547


$
0.52


$
919$ 1.20  $ 1.20


105



8.85



1.20



105



31



1.20



31$ 1.27  $ 1.27


1,000



5.92



1.27



930



1,000



1.27



930$ 1.35  $ 1.35


25



9.21



1.35



21



9



1.35



8$ 1.39  $ 1.39


1,765



6.50



1.39



1,430











$ 1.42  $ 1.47


1,074



8.71



1.45



806



390



1.45



293$ 1.50  $ 1.57


948



7.89



1.55



616



537



1.55



349$ 1.67  $ 2.00


732



8.33



1.77



315



307



1.73



144$ 2.08  $ 9.00


569



5.27



4.23







524



4.41



$11.00  $11.00


33



4.58



11.00







33



11.00



$0.12


6,966



7.10


$
1.63


$
5,409



3,378


$
1.84


$
2,673   in-the-money
    WeightedAverage


Weighted








WeightedRemaining


Average


Aggregate





Average


AggregateNumber


Contractual


Exercise


Intrinsic


Number


Exercise


IntrinsicRange of Prices

Outstanding


Life


Price


Value


Exerciseable


Price


Value(thousands)











(thousands)$0.50  $1.38


115



1.98


$
1.08


$
129



58


$
0.87


$
78$1.39  $1.65


80



1.38



1.58



50



50



1.59



30$1.66  $2.10


126



3.19



1.73



59



11



1.68



5321



2.30


$
1.46


$
238



119


$
1.24


$
113    11




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Stock-Based
    Compensation
  Effect
    of Early Adoption of SFAS 123(R)
  Accounting for
    Stock-Based Compensation stock-based Accounting for Stock Issued to Employees Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation, Transition and
    Disclosure
    Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation, Transition and
    Disclosure.
  share-based
  stock-based
 12




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Valuation
    and Expense Information under SFAS 123(R)
    Three Months


Nine MonthsEnded


EndedDecember 31,


December 31,2005


2005Stock-based compensation expense
    included in cost of sales

$
20


$
56Research and development


123



344Sales and marketing


70



210General and administrative


156



429Stock-based compensation expense
    included in operating expense


349



983Stock-based compensation expense
    related to employee stock options, employee stock purchases and
    stock appreciation rights

$
369


$
1,039     Three Months Ended December 31,


Nine Months Ended December 31,2005


2005Restated








RestatedUsing


SFAS





Using


SFASPrevious


123(R)





Previous


123(R)Accounting


Adjustment


As Reported


Accounting


Adjustment


As ReportedLoss from operations

$
(1,775
)

$
(369
)

$
(2,144
)

$
(5,778
)

$
(1,039
)

$
(6,817
)Net loss

$
(1,658
)

$
(369
)

$
(2,027
)

$
(5,451
)

$
(1,039
)

$
(6,490
)Basic and diluted net loss per
    share

$
(0.07
)

$
(0.01
)

$
(0.09
)

$
(0.23
)

$
(0.04
)

$
(0.28
)Net cash used in operating
    activities

$
(1,821
)





$
(1,821
)

$
(6,464
)





$
(6,464
)Net cash provided by investing
    activities

$
2,115






$
2,115


$
8,447






$
8,447  13




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Valuation
    Assumptions for Stock Options
    Three Months


Nine MonthsEnded


EndedDecember 31,


December 31,2005


2005Stock Option PlanRisk-free interest rate


4.2
%


3.9
%Expected life (in years)


3.0



3.9Volatility


89.7
%


90.3
%SARS
    PlanRisk-free interest rate


4.2
%


3.9
%Expected life (in years)


4.0



4.0Volatility


89.7
%


90.3
%   risk-free
    For the


For theThree Months


Nine MonthsEnded


EndedDecember 31,


December 31,2004


2004Net loss as reported

$
(1,580
)

$
(4,703
)Less: stock based compensations
    determined under FAS 123


(357
)


(1,315
)Pro forma net loss

$
(1,937
)

$
(6,018
)Basic and diluted net loss per
    share:As reported

$
(0.07
)

$
(0.21
)Pro forma

$
(0.08
)

$
(0.26
)   Net Loss
    Per Share
   14




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   anti-dilutive.
  For the Three Months


For the Nine MonthsEnded December 31


Ended December 312005


2004


2005


2004Restated





RestatedNet loss

$
(2,027
)

$
(1,580
)

$
(6,490
)

$
(4,703
)Weighted average shares used in
    computing basic and net loss per share


23,579



22,857



23,390



22,754Basic and diluted net loss per
    share

$
(0.09
)

$
(0.07
)

$
(0.28
)

$
(0.21
)Options and warrants excluded from
    the computation of diluted net loss per share


6,955



5,928



6,955



5,928     NOTE 3.
    BALANCE
    SHEET COMPONENTS  December 31,


March 31,2005


2005Restated(in thousands)Accounts receivable,
    netTrade receivables

$
3,431


$
912Less: Allowance for doubtful
    accounts


(387
)


(120
)$
3,044


$
792Inventories:Work in process

$
1,368


$
515Finished goods


344



83$
1,712


$
598Property and equipment,
    net:Furniture and fixtures

$
175


$
441Machinery and equipment


2,941



2,473Software


2,897



2,8516,013



5,765Less: Accumulated depreciation and
    amortization


(5,028
)


(4,677
)$
985


$
1,088Accrued liabilities and
    other:Accrued compensation costs

$
993


$
492Accrued license technology






700Accrued audit and legal


278



192Accrued inventory


898



189Other


158



165$
2,327


$
1,738  15




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   NOTE 4.
    SHORT-TERM
    INVESTMENTS    Mature Less Than 12 MonthsCost


Aggregate


UnrealizedValue


Fair Value


Gain/(Loss)(In thousands)As of December 31,
    2005U.S. government and agency
    securities

$
1,000


$
997


$
(3
)U.S. corporate and bank debt


7,847



7,868



21Total

$
8,847


$
8,865


$
18As of March 31,
    2005U.S. government and agency
    securities

$
7,000


$
6,958


$
(42
)U.S. corporate and bank debt


10,753



10,706



(47
)Total

$
17,753


$
17,664


$
(89
)   NOTE 5.
    CERTAIN
    RISKS    Significant
    customers
      For the


For theThree Months


Nine MonthsEnded


EndedDecember 31


December 31,2005


2004


2005


2004Restated





RestatedCustomer A


36
%


*



19
%


*Customer B


14
%


*



10
%


*Customer C


14
%


*



*



*Customer D


12
%


*



*



*Customer E


10
%


*



*



*Customer F


*



53
%


12
%


40
%Customer G


*



*



11
%


*Customer H


*



*



10
%


*      16




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Concentration
    of Credit Risk
      December 31,


March 31,2005


2005Customer A


21
%


19
%Customer B


16
%


27
%Customer C


16
%


*Customer D


*



27
%       Vendor
    Concentration
      NOTE 6.
    SEGMENT
    AND GEOGRAPHIC INFORMATION   17




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     For the Three


For the NineMonths Ended


Months EndedDecember 31,


December 31,2005


2004


2005


2004Restated





RestatedChina


25
%


*



38
%


*Europe


*



52
%


13
%


41
%Japan


49
%


14
%


27
%


17
%United States


24
%


17
%


20
%


13
%Other


*



17
%


*



29
%       NOTE 7.
    COMMITMENTS
    AND CONTINGENCIES  Stock
    Repurchase
      Litigation
    Commitments
     18




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
     Notes


OperatingFiscal Year

Payable


Leases


Total2006

$
250


$
53


$
3032007


425



172



5972008


225







225Total minimum payments


900


$
225


$
1,125Less: Amount representing interest


(66
)Present value of minimum payments


834Less: Current portion


(630
)Long term portion

$
204   NOTE 8.
    RESTATEMENT  Form 8-K
 19




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   Form 10-Q
  Three Months Ended December 31, 2005As PreviouslyReported


Adjustments


As Restated(in thousands, except per share amounts)Revenues

$
2,710


$
(775
)(1)

$
1,935Cost of revenues


1,306



(400
)(2)


906Gross profit


1,404



(375
)


1,029Operating expenses:Research and development


1,341







1,341Sales and marketing


866



(78
)(3)


788General and administrative


1,044







1,044Total operating expenses


3,251



(78
)


3,173Operating loss


(1,847
)


(297
)


(2,144
)Other income, net


117







117Net loss

$
(1,730
)

$
(297
)

$
(2,027
)Basic and diluted net loss per
    share:

$
(0.07
)

$
(0.01
)

$
(0.09
)Shares used in computing basic and
    diluted net loss


23,579



23,579



23,579   Nine Months Ended December 31, 2005As PreviouslyReported


Adjustments


As Restated(in thousands, except per share amounts)Revenues

$
5,573


$
(775
)(1)

$
4,798Cost of revenues


2,875



(400
)(2)


2,475Gross profit


2,698



(375
)


2,323Operating expenses:Research and development


3,876







3,876Sales and marketing


2,129



(78
)(3)


2,051General and administrative


3,213







3,213Total operating expenses


9,218



(78
)


9,140Operating loss


(6,520
)


(297
)


(6,817
)Other income, net


327







327Net loss

$
(6,193
)

$
(297
)

$
(6,490
)Basic and diluted net loss per
    share:

$
(0.26
)

$
(0.01
)

$
(0.28
)Shares used in computing basic and
    diluted net loss


23,579



23,390



23,390   20




---



##### Table of Contents



TVIA, INC. AND SUBSIDIARY
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
   December 31, 2005CurrentAs Previously


Quarter


AsReported


Adjustments


Restated(in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
6,070






$
6,070Short-term investments


8,865







8,865Accounts receivable, net


3,044







3,044Inventories


1,712







1,712Deferred cost of goods sold






400
(2)


400Other current assets and prepaid
    expenses


958







958Total current assets


20,649



400



21,049Property and equipment, net


985







985Other assets


375







375Total assets

$
22,009


$
400


$
22,409LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
664






$
664Accrued liabilities and other


2,405



(78
) (3)


2,327Short-term portion of notes payable


630







630Deferred revenue






775
(1)


775Total current liabilities


3,699



697



4,396Long-term portion of notes payable


204







204Total liabilities


3,903



697



4,600Commitments and contingenciesStockholders equityCommon stock, $0.001 par
    value: 125,000 shares authorized; 23,466 and
    23,171 shares outstanding, respectively


24







24Additional
    paid-in-capital


94,667







94,667Accumulated comprehensive income
    (loss)


18







18Accumulated deficit


(75,853
)


(297
)


(76,150
)Treasury stock


(750
)






(750
)Total stockholders equity


18,106



(297
)


17,809Total liabilities and
    stockholders equity

$
22,009


$
400


$
22,409   (1)
    
    Reflects the deferral of revenue(2)
    
    Reflects the COGS adjustment related to (1) above(3)
    
    Reflects the adjustment of accrued sales commissions as a result
    of (1) above 21




---



##### Table of Contents



ITEM 2:
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    RESULTS OF OPERATIONS  Form 10-Q Form 10-K
  Form 10-Q Form 10-Q
  Restatement
  Form 8-K
  Overview
     22




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
  Form 10-K
 23




---



##### Table of Contents



Results
    of Operations
    Nine MonthsThree Months Ended


EndedDecember 31,


December 31,2005


2004


2005


2004Restated





RestatedRevenues


100
%


100
%


100
%


100
%Cost of revenues


47
%


54
%


52
%


55
%Gross profit


53
%


46
%


48
%


45
%Operating expenses:Research and development


69
%


111
%


81
%


166
%Sales and marketing


41
%


40
%


43
%


40
%General and administrative


54
%


50
%


67
%


63
%Total operating expenses


164
%


201
%


190
%


269
%Operating loss


−111
%


−142
%


−142
%


−224
%Interest income


6
%


10
%


7
%


14
%Net loss


−105
%


−145
%


−135
%


−210
%   Revenues.
    Gross margin.
  Research and development. SFAS No. 123(R) Form 10-Q.
 24




---



##### Table of Contents



Sales and marketing. SFAS No. 123(R) form 10-Q.
  General and administrative. SFAS No. 123(R) form 10-Q.
  Other income, net.
  Provision for income tax.
 25




---



##### Table of Contents



Liquidity
    and Capital Resources
          Stock
    Repurchases
      Contractual
    commitments and Off-Balance Sheet Arrangements
     26




---



##### Table of Contents



Less than








More thanContractual Obligations

Total


1 year


1-3 years


3-5 years


5 yearsNotes Payable


900



250



650Operating Lease Obligations


225



198



27







Total


1,125



448



677







    27




---



##### Table of Contents



RISK
    FACTORS
  Our
    future operating results are likely to fluctuate and may fail to
    meet expectations, which could cause our stock price to
    decline.
    
    the general condition of the semiconductor industry market;
    fluctuations in the volume of product sales, changes in product
    mix and pricing concessions on sales;
    the timing, rescheduling or cancellation of significant customer
    orders;
    the timing of investments in, and the results of, research and
    development;
    changes in industry standards;
    introduction of interactive television services by service
    providers;
    availability of manufacturing capacity and raw materials, and
    inventory write-offs;
    product introductions and price changes by our competitors;
    our ability to specify, develop, introduce and market new
    products with smaller geometries, more features and higher
    levels of design integration in accordance with design
    requirements and design cycles;
    the level of orders received that can be shipped in a given
    period;
    changes in earning estimates or investment recommendations by
    analysts;
    changes in investors perceptions; and
    the effect of the terrorist attacks in the United States and any
    related conflicts or similar events worldwide.  We
    currently rely on certain international customers for a
    substantial portion of our revenues and are subject to risks
    inherent in conducting business outside of the United
    States.
    
    difficulties in collecting accounts receivable
    difficulties in managing distributors or representatives
    exchange rate variations, tariffs, import restrictions and other
    trade barriers
    political and economic instability
    unexpected changes in regulatory requirements   28




---



##### Table of Contents



We were
    required to defer significant amounts of revenue, and we may not
    be able to recognize those amounts if our customers do not pay
    us.
    New
    product announcements could result in decreased demand for our
    older products or a decline in our inventory value, which in
    turn may harm our business, financial position and operating
    results.
    We
    identified two material weaknesses in internal control over
    financial reporting during fiscal year 2006. If we fail to
    maintain an effective system of internal controls, we may not be
    able to report our financial results accurately, which may cause
    investors to lose confidence in our reported financial
    information and have an adverse effect on the price of our
    common stock.
     29




---



##### Table of Contents



A
    significant amount of our revenues comes from a few customers
    and any decrease in revenues from these customers could
    significantly impact our financial results.
    If we
    fail to develop new products and enhance our existing products
    in order to react to rapid technological change and market
    demands, our business will suffer.
      We expect
    continuing losses and may not achieve profitability, which could
    affect our ability to expand our business.
    Our
    operating expenses may increase as we build our business and
    these increased expenses may impact our ability to become
    profitable.
    Our
    industry is highly competitive, and we cannot assure you that we
    will be able to effectively compete.
   30




---



##### Table of Contents




    functionality;
    performance;
    time to market;
    price;
    conformity to industry standards;
    product road maps; and
    technical support.      A slow
    down in the DTV market could significantly affect our revenue
    growth.
    Because
    of our long product development process and sales cycle, we
    incur substantial expenses before we generate revenues and may
    not recover our expenditures.
     31




---



##### Table of Contents



If we
    fail to successfully develop, introduce and sell new products,
    we may be unable to effectively compete in the future.
    
    our failure to complete new product designs in a timely manner;
    our inability to manufacture our new products according to
    design specifications;
    our inability to deliver our products to our customers in a
    timely manner for any reason, including lack of manufacturing
    capacity or the failure of our contracted foundries to meet
    targeted-manufacturing yields;    
    our sales forces and independent distributors
    inability to create adequate demand for our products.  We depend
    on two independent foundries to manufacture our products based
    on our forecasts, which could result in an oversupply or
    undersupply of products.
    The foundries require us to provide forecasts of our
    anticipated manufacturing orders in advance of receiving
    purchase orders from our customers. This may result in product
    shortages or excess product inventory. Obtaining additional
    supply in the face of product shortages may be costly or not
    possible, especially in the short term. Our failure to
    adequately forecast demand for our products would materially
    harm our business. The foundries may allocate capacity to the
    production of other companies products while reducing
    delivery to us on short notice.
     32




---



##### Table of Contents



If we
    have to qualify new independent foundries for any of our
    products and do not have sufficient supply of our products on
    hand, we may lose revenues and damage our customer
    relationships.
        Our
    semiconductors are complex to manufacture and may have errors or
    defects, which could be costly to correct.
    Our
    software is complex and may have bugs or defects which could be
    costly to correct.
   33




---



##### Table of Contents



If the
    industries into which we sell our products experience recession
    or other cyclical effects impacting our customers budgets,
    our operating results could be negatively impacted.
          We depend
    on key personnel, the loss of whom would impair or inhibit the
    growth of our business.
       34




---



##### Table of Contents



We depend
    on third-party subcontractors for assembly of our semiconductors
    which reduces our control over the delivery, quantity, quality,
    or cost of our products.
    Political
    instability in the Peoples Republic of China or Taiwan
    could harm our manufacturing and research and development
    capabilities and negatively impact our product sales.
          We may
    face intellectual property infringement claims that could be
    costly and could result in the loss of proprietary rights which
    are necessary to our business.
   35




---



##### Table of Contents



Regulation
    of our customers products may slow the process of
    introducing new products and could impair our ability to
    compete.
   
  ITEM 4:
    CONTROLS
    AND PROCEDURES  Evaluation of disclosure controls and
    procedures. Rule 13a-15(e)
     36




---



##### Table of Contents



Form 10-K Rule 13a-15(e)
    Form 8-K
      Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
    Changes
    in internal controls
  Rule 13a-15(f)
 37




---



##### Table of Contents



SIGNATURES
      By:
    /s/  
    Keith Yee        38




---



##### Table of Contents



EXHIBIT
    INDEX
  ExhibitNumber3(i)
.1

Amended and Restated Certificate
    of Incorporation (incorporated by reference to the exhibit of
    the same number in the Registrants
    Form 10-Q
    for the quarter ended June 30, 2005, as filed with the SEC
    on  August 15, 2005  to Amendment No. 8 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 333-34024)).3(ii)
.1

Amended and Restated Bylaws of
    Tvia, Inc. (incorporated by reference to the exhibit of the same
    number in the Registrants
    Form 10-Q
    for the quarter ended June 30, 2005, as filed with the SEC
    on August 15, 2005).31
.1

Certification of Principal
    Executive Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of Principal
    Financial Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Principal
    Executive Officer Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.**32
.2

Certification of Principal
    Financial Officer Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.**     **
    In accordance with Item 601(b)(32)(ii) of
    Regulation S-K
    and SEC Release
    Nos. 33-8238
    and
    34-47986,
    Final Rule: Managements Reports on Internal Control Over
    Financial Reporting and Certification of Disclosure in Exchange
    Act Periodic Reports, the certifications furnished in
    Exhibits 32.1 and 32.2 hereto are deemed to accompany this
    Form 10-Q
    and will not be deemed filed for purpose of
    Section 18 of the Exchange Act. Such certifications will
    not be deemed to be incorporated by reference into any filing
    under the Securities Act or the Exchange Act, except to the
    extent that the registrant specifically incorporates it by
    reference. 39